Starting A Cottage Food Operation – First Steps
Last week, I wrote about starting your food business the easy way, which covered ways to bypass regulations to prove your business concept as quickly and easily as possible. But let’s say you are ready to start your cottage food operation, and you have a fairly good idea for what you want to sell — now what? How do you setup your business?
If you live in a state that allows you to sell homemade food without any roadblocks (like Wyoming), then lucky you… you can start selling immediately! But for most of us, starting a business isn’t that easy.
Depending on where you live, there could be any number of barriers between you and the start of your cottage food business. This is the first of a series of posts about some of the factors that you may need to address on your entrepreneurial adventure.
This post focuses on a couple of the first things you need to know when getting started. Upcoming posts will cover topics like dealing with health and ag departments, zoning laws, taxes, a kitchen inspection, labeling, etc.
Dealing with Regulators
Nearly everyone has to interact with a handful of regulators and government employees before they can start their business. Sometimes it’s painless and sometimes it’s painful, but either way, it’s necessary!
Please be aware that regulators are often unfamiliar with the cottage food laws (this even regularly happens with health/ag departments who are tasked with enforcing them), so it’s always good to do your research before communicating with someone. However, it’s important to note that much of the information that’s applicable to you cannot be found online, and the only way to get it is by reaching out to a variety of people.
Generally speaking, I recommend trying to contact people via email first, as that can often lead to a faster response. It used to be that picking up the telephone was the fastest way to get an answer (sometimes it still is), but I’ve noticed that busy government workers tend to prefer email. If email doesn’t work, try calling them, or if worse comes to worst, head over to their office. Many times you will get quick responses, but it’s not uncommon for communication to take up to two weeks, so you may need to be patient.
Landlord
If you do not own your home, then you will likely need to get permission from your landlord before you can start your home food business. Usually landlords have the ability to prevent your business from starting, so you need to address this as soon as possible.
Even if you do own your home, there are times when a HOA (Homeowners Association) can prevent your business from starting. However, this is very uncommon, especially if you do not allow pickup of orders at your home.
Sometimes landlords say no to cottage food operations because they are simply unaware of the laws or unfamiliar with these types of businesses, so they play it “safe” (even though your business is unlikely to negatively impact their business). Unfortunately, once someone says “no”, consistency pressures make it very difficult for them to change their response later. You can help prevent this by providing them with cottage food law information, a simple business plan, and (if possible) an example or two of other CFOs who are currently operating in your area in a similar living situation. Generally, you want to remove as many unknowns as possible.
One thing they may be concerned about is increased traffic to their property. Cities usually have at least one traffic consultant, and when residential units get built, a city has to create plans to show what impact it will have on roads and law enforcement. It may be that your landlord cannot approve of your business because of this, or they may just be concerned about the safety of their residents due to unknown visitors coming to pick up orders. In that case, you can propose that you will not allow any pickup options for your business, and instead will offer delivery and/or sell at other venues.
Having a good relationship with your landlord may be the difference between whether you get the green or red light. Depending on your comfort level with your landlord, you might even be able to sway them by bringing in a sample of your products when you meet about this. You want to do anything that will get them on your side, rooting for your business to succeed. Sometimes a product tasting can help them understand why all of your friends have been saying “you should sell these”.
